How to Create an Exchange Traded Fund

Updated on Monday 26th November 2018

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What are exchange traded funds? 

The exchange traded funds (ETFs) are investment vehicles that are addressed to individual investors. Investors interested in setting up an investment fund that provides multiple options of investments can set up the EFT, which accepts almost all categories of asset classes
 

Businessmen can invest through an ETF in the following:
 
commodities;
currencies;
all types of traditional investments;
all classes of alternative assets
 
An ETF can own a wide set of assets, such as: 
 
shares of stocks;
bonds;
gold bars;
foreign currencies
 
The ownership of the ETF’s assets are divided into shares and when setting up this type of fund it will be necessary to select a legal entity, as prescribed by the national investment legislation available where the vehicle is set up. The business forms available for an ETF can vary depending on the selected jurisdiction. 

 

Shareholders’ rights in an ETF 
 

Investors who are interested in setting up an investment fund will usually need to set up a legal entity for a specific type of vehicle. The business form will be established by the company’s shareholders, who are entitled to a part of the company’s profit. In the case of company representing an EFT, the shareholders will be able to receive a proportion of the profits, in the form of dividends or earned interest
 
It is important to know that the company’s shares can be bought by other investors and thus, the fund can be represented by other shareholders. 
 

The advantages of ETFs 
 

An ETF is considered a mutual fund that can invest in a wide category of assets, as mentioned earlier. One of the main advantages of the ETF refers to the fact that the investors may perform trading activities (buying or selling) at any time during a trading day, unlike the mutual fund, which may only perform this activity at the end of the day
 
At the same time, the investors are allowed to apply a set of investment strategies, which are not available for all types of funds
 
Businessmen are invited to contact our partners for consultancy services regarding the registration of an ETF in a top investment destination.